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Tern – was Device Authority’s NAV £2m or $10m as at FY16? Does It depend on whether you want to invest?

By Nigel Somerville, the Deputy Sheriff of AIM | Saturday 7 October 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Having taken another look at the website of US Capital Partners (who are raising cash for Device Authority Ltd, currently majority owned by AIM-listed Tern plc) I see the sale is now advertised. I note also that (on time) Device Authority Ltd has itself filed account for 2016. Now in theory, one would have thought the numbers would bear some form of resemblance….after all, they are for the same company in the same period. So what gives?

Here is what Companies House notes as the balance sheet of DA as at 31 December 2016:

And here is what US Capital Partners says, for the same period:

So let’s get this straight: Companies House says the net assets of Device Authority Ltd sat at about £2.1 million as at the 2016 year end, whereas US Capital Partners (which is raising money for Device Authority Ltd) says $10.2 million.

I did wonder if it was a case of measuring apples against pears, because there is Device Authority Ltd (a UK company, formerly known as Cryptosoft Ltd) and US-based Device Authority Inc which was bought out by the UK company.

But US Capital Partners makes clear that it is talking about the UK company, stating:

US Capital Global Securities (“USCGS”) is offering 400 Membership Units in USCIM Fund XXX Device Authority, LLC (“Fund XXX”), a pooled investment vehicle on a “best efforts” basis. Fund XXX will be managed by San Francisco-based asset management firm US Capital Investment Management, LLC (“USCIM” or the “Manager”), investing in Class A-1 preference shares of Device Authority Ltd. (“DA” or the “Company”).

(my underline)

Perhaps Tern would care to clear up the matter – ideally before any US punters pile in. Surely a discrepancy of about 500% in the NAV, as at FY16, merits an explanation to potential investors across the pond?

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